Before the bell: opportunities in times of war

Energy prices are soaring. Which companies benefit?

In general, most stocks take a hit when war breaks out. Last week, an average European stock, as measured by the Euro Stoxx 50, even lost almost 7%. In Brussels, the Bel20 held up somewhat better with a weekly loss of 4.6%. In Asia, Japan’s Topix and the Hang Seng Index in Hong Kong fell 5.6% and 3.3%, respectively, over five days. In the United States, the S&P 500 and Nasdaq declined 2% and 1.2% over the week. While the main global indices turned deep red last week, some companies nevertheless managed to swim against the current. It may sound paradoxical, but some businesses benefit from war and the inevitably rising energy prices that come with it. The share price of Neste, for example, rose by more than 18% in one week. The Finnish company specialises in renewable diesel and clean fuel for the aviation industry and sources roughly 90% of the ingredients for its products from waste. Venture Global also surged nearly 30% over the week, as the US LNG exporter is well positioned to cover part of the global supply shortfall.

This morning the oil price briefly climbed towards 120 dollar per barrel, which represents a doubling of the price in just one month. In Asia, the Hang Seng Index in Hong Kong is down 1.5%, while Japan’s Topix is falling 3.7%. Today the Israeli shipping company ZIM will publish its results, and in the United States we will get figures from Hewlett Packard Enterprise and ski resort operator Vail Resorts. In Europe, the Sentix sentiment index will provide a snapshot of investor confidence in the current economy.

Some are already thinking about a ceasefire

In February, Novo Nordisk and Hims were still at odds. At the time, the Danish pharmaceutical company took the American firm Hims to court after it announced it would offer copycat versions of Novo’s weight-loss pill Wegovy on its health platform. Within a month, Hims’ market value was cut in half. Yet on Friday after the close the share price jumped almost 40% again after Novo Nordisk and Hims announced plans to cooperate. Novo Nordisk will soon offer its weight-loss products through the Hims platform. A year ago the two companies already had a similar agreement, but it ultimately did not go through. Now that both companies are under pressure, that may change. The situation could become a win-win for both sides. The Danish company would strengthen its presence on the US market and once again compete more directly with Eli Lilly, while Hims would benefit from the booming market for weight-loss drugs.

To monopoly or not to monopoly

Live Nation is said to be close to reaching an agreement with US antitrust authorities and may ultimately not have to sell its subsidiary Ticketmaster. Live Nation joined forces with Ticketmaster in 2010. Since then, the two companies have made competition in the sector extremely difficult by signing long-term and often exclusive ticketing contracts with concert venues. The company’s partnerships with major artists such as Taylor Swift, Lady Gaga and The Weeknd also help secure such contracts. Competitors such as Eventim and AEG Presents therefore hold only a fraction of the market share. Some time ago, the world’s largest promoter of concerts and live shows was therefore asked to dismantle or reconsider its monopoly. Now, however, a settlement may be reached that would allow the two companies to continue operating together.

Did you know…

that the new CEO of Berkshire Hathaway, Greg Abel, will use his entire annual salary of 25 million dollar to buy Berkshire shares? In doing so, he wants to win the confidence of shareholders and demonstrate that he intends to create long-term value for Berkshire.

This article was translated from Dutch and was originally published on Spaarvarkens.be.